As companies reach a plateau in market share, they often face increasing pressure from investors and shareholders to enhance returns and elevate stock prices. In response, management typically first seeks to improve efficiency by reducing costs without compromising customer satisfaction or employee conditions. However, this initial strategy may not provide sustainable benefits, particularly in competitive industries.
When companies exhaust this approach, they typically encounter two paths. The first involves re-engaging with the market through innovation, aiming to create new opportunities and value for customers. The second, and more prevalent option, involves compromising employee welfare and customer service quality for short-term profit gains. This often manifests as increased demands on staff and decreased service standards, ultimately leading to a deterioration of the overall customer experience.
For instance, FedEx has shifted focus from quick customer service to profitability, employing automated phone systems and limiting customer interaction. Similarly, JP Morgan Chase has prioritized maximizing short-term earnings through strategies that may include investing in less sustainable sectors and outsourcing operations.
Cory Doctorow highlights this phenomenon, coining the term “enshittification” to describe companies’ deliberate exploitation of their established customer bases for immediate financial gain. As organizations pursue this path, they often obscure their practices, prioritizing short-term profits over long-term value and innovation.
Ultimately, as companies deteriorate in quality while claiming to prioritize customer and employee satisfaction, a clear distinction emerges between those engaged in genuine improvement and those simply attempting to maintain profit margins at the expense of service.
Why this story matters: It underscores the ethical dilemmas companies face when prioritizing profits over quality.
Key takeaway: Sustainable business success requires genuine innovation and engagement with employees and customers rather than short-term profit strategies.
Opposing viewpoint: Some argue that short-term profit strategies are necessary for organizational survival and can enable future investment in innovation.
